Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

---

QUESTION 1

Alice and Bob were friends from college who decided to open a store selling electronics products in Wilmington, Delaware. They decided to call their store Everything Electronics. Alice had experience in the retail electronics field and agreed to manage the daily operations of the store and to contribute her computer for use in the store. Alice's computer was worth Five Thousand Dollars ($5,000). Bob didn't have time to participate actively in the daily operations of the store because he had a full-time job, but agreed to spend a few hours each week assisting in the management of the venture. Bob also agreed to contribute Fifteen Thousand Dollars ($15,000) to Everything Electronics.

Based on the advice of their attorney, Charlie Counsel ("Charlie"), Alice and Bob decided to form their business as a Delaware limited partnership called AB Electronics, L.P. They further agreed that Alice would be the general partner and Bob would be the limited partner. Alice and Bob agreed that they would provide Charlie with certain information so that he could draft a limited partnership agreement for their review. In their rush to open the store and start the business, however, Alice and Bob failed to provide Charlie with the requested information; therefore, no documents were drafted with respect to the limited partnership.

Soon after opening the store, it became clear to Alice and Bob that they needed to borrow additional money to keep the business operating until it began to turn a profit. Alice's dad, David, agreed to lend the business Fifty Thousand Dollars ($50,000). The promissory note evidencing the loan from David provided that he was to be paid One Thousand Dollars ($1,000) each month as a return of the principal of the loan, plus twenty percent (20%) of the profits from the Everything Electronics store until the loan was paid in full. The promissory note was signed by both Alice and Bob, who agreed to pay any portion of the loan that was not paid by the business.

Just two days after the Everything Electronics store opened in Wilmington, Sally Shopper ("Sally") slipped on a patch of ice while entering the store and broke her arm. Sally decided to sue the store and retained Laura Lawyer ("Laura"). In conducting her investigation of the incident, Laura discovered that Alice, Bob and David shared profits from the Everything Electronics store. Laura also learned that the Everything Electronics store was leased to AB Electronics, L.P. Laura, however, found no record of a business called AB Electronics, L.P. being formed in Delaware. Based on Laura's investigation, Sally sued Everything Electronics, Alice, Bob and David for medical expenses and pain and suffering resulting from her broken arm.

Upon receiving Sally's complaint, Alice, Bob and David met with Charlie to discuss the lawsuit, including why they were named as defendants, rather than AB Electronics, L.P. Charlie advised them, among other things, that AB Electronics, L.P. had not yet been formed.

For all remaining questions, assume that the Everything Electronics business is a Delaware general partnership.

In order to make the store successful, Alice sometimes works more than sixty (60) hours a week. On the other hand, Bob, who has a full-time job with a bank, devotes only a couple of hours a week to the business. By the end of its first year, the store had generated profits of Twenty-Five Thousand Dollars ($25,000). Both Alice and Bob agreed that, based on the terms of the promissory note, they were obligated to pay 20% of the profits to David. With regard to the remaining $20,000, Alice suggested that she should be paid the first $10,000 as compensation for handling the daily operations of the business, and the remaining $10,000 should be split evenly between Alice and Bob. Bob asserted that he should be entitled to $15,000 and Alice to only $5,000, because Bob had contributed 75% of the original capital and Alice had contributed only 25%.

One day while working at the store, Alice is approached by Gary, a salesman for Flash Electronics ("Flash"). Gary explains that Flash has just developed a new type of electronics device and is looking for a Delaware distributor. Alice believes that the new device will be successful and agrees to be the Delaware distributor. Alice signs the distributor agreement with Flash for her own benefit, and does not tell Bob about it. Alice works on the Flash venture only during her free time, and her work for Flash has not resulted in her devoting less time to Everything Electronics. Bob, however, discovers Alice's arrangement with Flash and demands that the distributor agreement with Flash should be included in their partnership. Alice refuses.

Based on a decline in Everything Electronics' sales, Bob expressed concerns regarding Alice's management of the store and demanded to review all of the store's financial information. Alice refused to provide the information, stating that Bob had done little to make the store successful and, therefore, had no right to review the financial information in order to second-guess Alice's management of the store. In addition, Alice pointed out that Bob periodically is provided with financial statements and tax returns that are prepared by Everything Electronics' accountants.

Unhappy with Alice's management of the Everything Electronics store, Bob sold his interest in the store to Fred for $20,000. Alice was advised of the sale, but refused to consult with Fred regarding the management of the store or provide him with any information regarding its operations.

Assume that Bob did not sell his interest to Fred. Given the recent decline in the performance of the Everything Electronics store, Alice and Bob are concerned that they may be deemed personally liable for the debts incurred by Everything Electronics that it cannot pay. Therefore, they seek advice from Charlie as to how to protect themselves from such personal liability. Charlie suggests that they can avoid personal liability with regard to Everything Electronics by setting it up as a Delaware limited liability partnership.

---

QUESTION 2

Seventeen-year-old Arthur and his thirty-year-old uncle, Buster, come to your law office requesting that you represent them in upcoming Delaware court proceedings. Both are charged with possession with intent to deliver crack cocaine and second degree conspiracy. Buster is separately charged in the same Superior Court indictment with attempted first degree murder, possession of a firearm during the commission of a felony and possession of a deadly weapon by a person prohibited. They have rejected plea bargain offers and they inform you that they are not interested in any type of plea bargain and only want to proceed to trial.

The operative facts are that Arthur and Buster were both arrested at 11 p.m. one Friday evening. Earlier that same evening, local police investigated a shooting incident at a bowling alley. Although no one was actually shot, the police determined that several eyewitnesses saw an individual matching Buster's description fire several shots at various people in the bowling alley parking lot. The police recovered three .32 caliber bullets that struck cars in the parking lot, but no suspect was immediately located.

Approximately two hours after the shooting incident, the police received an anonymous 911 telephone call advising that two men were acting suspiciously on a street corner less than a mile from the bowling alley. The reported location was a high crime area known for open air street drug sales. As the police exited their marked patrol car at the street corner, they announced they were police and told Arthur and Buster, the only other individuals present, to stop. Arthur and Buster immediately fled, dropping large plastic bags containing contraband narcotics as they ran away. The police retrieved the plastic bags and found that each contained several smaller bags of crack cocaine, apparently prepackaged for street sale.

After Arthur and Buster were apprehended, a police search revealed that each had over $500 in cash and Buster possessed a .32 caliber handgun. On the way to the police station, officers interrogated both suspects, although no Miranda warnings were given. In response to this questioning, Arthur admitting selling crack cocaine earlier that evening with Buster. After arriving at the police station, both suspects were given Miranda warnings and each requested to speak with a lawyer. They were both told that it was too late at that time of night to talk to a lawyer, and they were separated and interrogated on videotape. During the taped interviews, Arthur repeated his incriminatory statements about drug dealing, while Buster only conceded that he might have been at the bowling alley earlier that evening.

Although the police retained custody of Buster's gun, it was lost prior to trial and before any ballistics testing. Both defendants have lengthy juvenile criminal records, including prior drug convictions, and Buster also has several adult violent felony convictions.

Assume that all of the above-described activities occurred in the State of Delaware in calendar year 2001. Answer the following questions and explain the reasons for your answers. As to each pretrial motion, explain the factual and legal bases for the motion and comment on the motion's likelihood of success.

---

QUESTION 3

In September 2000, Buyco Inc., an electronics retailer in Wilmington, Delaware, placed an order with Compco Inc., a computer manufacturer also located in Delaware. Buyco ordered 250 of Compco's 2001 model personal computer ("PC") systems. Compco's 2001 model PC is the same in appearance as its 2000 model, which Buyco previously bought in large quantities and sold successfully to its customers. Compco's 2001 model, however, processes data at a significantly faster speed (1.7 gigahertz (GHz)) than the 2000 model (1.0 GHz). The terms of the purchase order called for Compco to deliver the 250 PCs to Buyco's Wilmington store during March and April 2001. The terms also required Buyco to pay for each shipment of PCs within thirty days of delivery. Buyco confirmed these terms by executing a written purchase order; Compco also confirmed them by signing its written acknowledgment.

In mid-February 2001, a Buyco representative told Compco that Buyco was having cash flow problems and was behind in payments to its creditors. The Buyco representative also said that Buyco still wanted to receive the PCs in March and April but probably would not be able to pay for them until ninety days after delivery.

1. Based on the above facts, please discuss the following issues:
2. 1. Assuming that the Uniform Commercial Code ("UCC") governs, did Buyco repudiate the contract between Buyco and Compco? Explain.
   2. Assume that Buyco repudiated the contract. What remedies and/or other alternatives are available to Compco under the UCC as a result of the repudiation? Explain.
   3. Aside from remedies and/or other alternatives potentially available for repudiation, identify and discuss any other means that the UCC gives Compco to address the uncertainties raised by Buyco's mid-February statements to Compco.
3. Assume that, in early March 2001, Compco delivers a 75-unit lot of PCs to Buyco's Wilmington store. The PCs are delivered in cartons labeled "Compco 2001 Personal Computer System," and the labels also specify the processing speed as 1.7 GHz. Buyco pays for the shipment ten days after delivery. A few days after paying, however, Buyco discovers that the PCs' processing speed is significantly less than what the Compco 2001 models are supposed to have. What rights may Buyco exercise under the UCC as a result of these non-conformities? Explain.
4. Assume that Buyco decides to keep for sale to its retail customers the 75 slower-speed PCs that it received from Compco. Chris Consumer ("Chris") wants to buy one of the PCs from Buyco after looking at a sample in Buyco's Wilmington store. Chris tells the Buyco salesman that he needs a high-speed computer to allow for operation of state-of-the-art software that he uses in a tax-return preparation business. The Buyco salesman responds that it is his first day on the job, and he doesn't know much about computers, but he is sure Buyco must be selling only the best computers available. Chris signs Buyco's standard purchase agreement, which includes the following language:

5. Buyco warrants its equipment to be free from defects for one year from the date of purchase. If any defect is discovered within the warranty period, Buyco will repair or replace the equipment at its store where the equipment was purchased. THIS LIMITED WARRANTY IS IN LIEU OF ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY. Buyco shall not be responsible for any incidental or consequential damages.

   After signing the purchase agreement and paying the purchase price, Chris picks up the PC at Buyco's loading dock. Chris notices that it is in a carton labeled "Compco 2001 Personal Computer System" and specifying "1.7 GHz." After using the PC for a few days, Chris determines that the PC is not Compco's 2001 model, that it does not run at a speed of 1.7 GHz, and that it will not operate the state-of-the-art software he uses to prepare tax returns. As a result of this situation, Chris is unable to prepare tax returns on the PC and therefore loses $3,500 of income.

   Under these facts:

   1. Can Chris successfully make a claim against Buyco for breach of an implied warranty of merchantability? Explain.
   2. Can Chris successfully make a claim against Buyco for breach of an implied warranty of fitness for a particular purpose? Explain.
   3. Aside from the limited repair-or-replace warranty specified in the agreement, can Chris successfully make an express warranty claim against Buyco based on the PC's having a lower speed than the package label indicates? Explain.
   4. Can Chris successfully assert a claim against Buyco under the UCC for the $3,500 of lost income? Explain.

---

QUESTION 4

John and Sally Owner ("Owners"), a married couple, always wanted to own land by the water. One day, they spotted an advertisement for a new development on the Delaware Bay named Sea Side Manor ("Sea Side").

Owners promptly called the telephone number in the advertisement and spoke to Ann Agent ("Agent"), who said she was President of Realty, Inc. ("Realty"), developer of Sea Side. Agent was aware that the property adjacent to Sea Side was on the market. She nonetheless represented to Owners that the adjacent property was a wildlife preserve owned by the Federal Government and would never be sold. She also told Owners that the deed restrictions in Sea Side ensured that houses had to be constructed from natural materials in earth tone colors. After several minutes of negotiations over the phone, Owners and Agent agreed on terms for the purchase of the waterfront lot on the very end of the subdivision next to the Federal lands. Agent's representations were determining factors in Owners' decision to purchase this lot.

At settlement, Owners signed a bank mortgage in favor of Big Bank ("Bank") for one-half (½) of the purchase price of the property plus construction costs, John Owner signed a note and personal money mortgage with Realty for one-quarter (¼) of the purchase price, and Owners paid the balance of the price plus costs in cash. Agent was unable to attend settlement but sent her personal secretary, who signed Agent's name to the deed as President of Realty and then notarized the signature as being that of Agent. The grantees in the special warranty deed were Owners as tenants by the entirety. After settlement, the bank officer went to the Recorder of Deeds and recorded the bank's mortgage. She then recorded the deed. Agent's secretary returned to Realty with the sales proceeds, the note and the personal money mortgage, which were recorded ten (10) days after settlement.>

Owners contracted with Hammer Contractors ("Hammer") to build their beach house. Hammer was to be responsible for all aspects of the job and contracted with several subcontractors to assist. Owners paid Hammer the periodic construction draws but the work progressed slowly. Five months after construction began, Owners received a letter from the plumbing subcontractor stating that he had not been paid. One week later Owners met with Hammer's project manager for the next draw. He gave Owners a release of lien ostensibly signed by the plumber and assured Owners that all subcontractors and materialmen had been paid. Seven months after the plumbing was installed, the plumber filed a mechanics' lien action naming as defendants John Owner, Hammer and Realty. The Complaint sought an unspecified amount of damages and demanded that a lien in the amount of the plumber's bill be placed against Owners' lot or, alternatively, that a judgment be entered against defendants personally.

Two events caused further concern to Owners. First, the building lot adjacent to Owners' lot was purchased and within days the new neighbors placed on the lot a red mobile home on cement blocks partially obstructing Owners' view of the bay. Owners contacted Agent and the Architectural Review Committee ("ARC") of Sea Side to protest the placement of the mobile home. They pointed out to Agent and the ARC the only covenant in their deed regarding the construction of homes in the development, which read:

Agent told Owners it was not her problem. The ARC said it would investigate the matter and have the mobile home removed.

Second, the Federal Government sold the land adjacent to Owners' lot to Deeds ‘R Us, a notorious developer of high density, low quality housing. Deeds ‘R Us announced plans to build 500 homes on the property and demanded access to their property over Owners' lot, claiming it was the only way to a public road. Deeds ‘R Us claimed that eight (8) years ago all of the beachfront in that area had been owned by one person, who first sold a landlocked part of the property to the Federal Government and thereafter sold the balance to Realty. Federal wildlife officers had used an old logging road over adjacent land the Government owned next to the highway to get to the Deeds ‘R Us property, but the Government now refused to allow Deeds ‘R Us to use that road for purposes of ingress and egress for its housing development.

Angry, Owners stopped making mortgage payments and contacted their attorney. You have been asked as an associate in the firm to provide detailed answers to the following questions:

---

Question 1 | Question 2 | Question 3 | Question 4
Question 5 | Question 6 | Question 7 | Question 8

---

QUESTION 5

Andrew and Benjamin were former college classmates who decided to start an internet consulting company. Their corporation -- Internet Consulting Company ("ICC") -- was incorporated in Delaware in June 1998. Andrew and Benjamin were the two initial directors and they each owned 50% of the initial shares outstanding. Andrew was appointed Chief Executive Officer. Benjamin was appointed Chief Technology Officer. ICC's certificate of incorporation, which has never been amended, contains only the items required by 8 Del. C. § 102(a) (i.e., ICC's name, registered office and agent, purpose, authorized stock, name and address of incorporator). Andrew and Benjamin have no contracts with each other or with ICC.

For the first year of its operation, ICC thrived. ICC hired several employees, developed proprietary technology, and entered into several lucrative long-term contracts. After that first year, however, Benjamin became convinced that Andrew did not have the managerial talent to take ICC to the next level of success. Benjamin believed he would be better off if ICC sold or ceased operations, so that he could develop a new business on his own. Andrew strongly disagreed, and said that, so long as he was CEO, a director and a 50% stockholder, he would devote his energies to furthering the business plan of ICC.

Benjamin seeks your advice. He doesn't want to stay in business with Andrew as CEO. He is willing to see ICC shut down if necessary, and he wants to move quickly.

Soon after Benjamin first sees you he reports a positive development. A noted venture capitalist, Cassandra, is negotiating to invest $5 million in ICC. She is seeking in return newly issued shares that would amount to 20% of the total shares outstanding and appointment to the board of directors. In this event, Andrew and Benjamin would each own a 40% stake in ICC and keep their respective board seats. Cassandra tells Benjamin that she is willing to consider the possibility of a new CEO once she makes the investment, which could occur within days if Andrew and Benjamin support it.

Cassandra makes the investment on the terms specified above. To Benjamin's dismay, Cassandra sides with Andrew. Benjamin subsequently finds himself omitted from discussions about the future direction of ICC. Benjamin suspects that Andrew and Cassandra are evaluating possible business combinations with other firms, but they refuse to call any board meetings or provide him with information. When Benjamin inquires, they tell him that he should just operate the technology side of the business and not pester them about financial and strategic matters.

Andrew and Cassandra send Benjamin a letter advising him that in three days the board of directors of ICC will meet for the purpose of voting on a proposed merger of ICC into AC Corp., a shell corporation in which Andrew and Cassandra are the only two stockholders. The letter advises that Andrew and Cassandra believe that the antagonism that has developed between them and Benjamin is detrimental to the best interests of ICC. The letter further advises that the deal is to be structured so that Andrew, Benjamin and Cassandra each will receive the same cash consideration per share in the merger, but only Andrew and Cassandra will be stockholders in AC Corp., the surviving corporation in the merger. Included with the letter is a report from an investment bank retained by Andrew on behalf of ICC analyzing the fairness of the proposed merger consideration. The letter to Benjamin is written and delivered in conformity with ICC's bylaws respecting the notice of board meetings.

At the board meeting, a representative from the investment bank says that he just received from Andrew a report prepared by an ICC employee the previous day analyzing the value of ICC's long-term contracts. The banker states that he has not had time to determine whether the report will affect his evaluation of ICC's value. Andrew says that as he is about to leave for vacation, it is important that a merger agreement be voted upon and adopted at the board meeting. He therefore proposes that a clause be added to the merger agreement stating that within ten days of the board meeting, the investment bank shall advise the board of directors whether, and to what extent, its determination of ICC's value is affected by the report, and that the merger consideration will be automatically adjusted to reflect the investment bank's assessment. Andrew and Cassandra vote in favor of a resolution approving the revised merger agreement.

You receive a phone call from Andrew's lawyer, who tells you that he heard that Benjamin intends to challenge the merger. Andrew's lawyer tells you that such a lawsuit would be subject to a motion to dismiss because, if Benjamin thinks the merger consideration is too low, his exclusive remedy under Delaware law is to seek a statutory appraisal of his shares.

---

QUESTION 6

Dandy Development, Inc. ("DD") is a commercial landlord that owns several apartment complexes in Delaware, including Apple Acres ("AA"), a 100-unit complex in New Castle, Delaware. DD also owns a large undeveloped lot adjoining AA. Two years ago, an informal group of AA tenants obtained DD's permission to construct a children's playground on the undeveloped lot. Numerous tenants contributed money and labor and soon the tenants built an attractive playground that greatly enhanced the AA community.

One morning Penny Plaintiff ("Penny"), an AA tenant, was with her children at the playground when a work crew arrived with bulldozers. The forewoman explained that her employer, Construction Company ("CC"), had been hired by DD to raze the playground as the first step in building more rental units on the lot. Penny managed to persuade the forewoman to hold off for one day. Penny then tried to reach DD but was completely unsuccessful.

Then Penny called you, her lawyer. Assume that you conclude that Penny and the other tenants have a non-frivolous claim that DD is obligated to maintain the property as a playground.

1. Your first concern is to protect the playground from imminent destruction. You conclude that your best option is to obtain an order requiring DD to delay its plans pending your lawsuit. Like Penny, however, you are completely unable to contact DD. Please describe what you file to obtain such an order and in which Delaware state court. How does the fact that you have been unable to notify DD affect your filing? Now assume that you are successful in obtaining the order enjoining DD. What will the Court require you to provide? What are the limitations on the order? Discuss your answer.

2. Now assume that you conclude that it would be advantageous to have the matter identified in Question No. 1 proceed as a class action, with Penny as the class representative.

3. Meanwhile, Penny's five-year-old son, Samuel Son ("SS"), and his friends have discovered the abandoned equipment left by the work crew on the playground. While climbing on and playing with the equipment, SS fell off a bulldozer and broke his arm. You have brought a tort action on behalf of SS against CC in Superior Court seeking damages resulting from CC's negligence in not securing the equipment left on the playground.

Assume that the case is being tried before a jury. Following the presentation of your case, CC wishes to ask the Court to grant judgment in its favor before CC presents its evidence to the jury.

CC timely appeals the judgment to the Delaware Supreme Court. You have received CC's opening brief and believe that the appeal is without merit.

What, if anything, can you file with the Delaware Supreme Court to expedite the appeal? What standards will the Delaware Supreme Court apply in deciding any such request? Explain your answer and discuss all applicable rules.

---

QUESTION 7

Mary and John, juniors at Delaware High School, were competing against each other for the honor of being elected Student President of their school. The winner would receive a 50% scholarship to any college or university in the State.

Mary and John were stellar students and athletes. They also were very competitive. Tom Teacher, who taught Honors U.S. History, observed, on a regular basis, that Mary and John sought to outperform each other in his classroom. For example, Mary and John often would raise their hands before Tom Teacher could complete a question in order to gain recognition. In addition, Tom Teacher observed that Mary and John occasionally interrupted one another.

In early February 2001, Tom Teacher heard from several of his students that John had a reputation of being "erratic" and "on edge." Based on his experience as a teacher, Tom Teacher believed that John's behavior evidenced drug usage. During this time, Tom Teacher also believed, based on his observations, that John had become overly aggressive because John always seemed to interrupt Mary in his classroom. Before this time period, John had interrupted Mary only occasionally.

On February 22, 2001, while the Honors History class was meeting, Mary saw John swallow pills and return the bottle of remaining pills to his backpack. Mary immediately described her specific observations to Tom Teacher. About an hour and one-half later, Tom Teacher contacted Olivia Officer, the school designated police officer, and reported Mary's conversation. Olivia Officer went directly to Tom Teacher's room and requested Mary and John to go to a nearby empty physics classroom for questioning. John also was requested to bring his backpack.

While in the physics classroom, John raised his voice and told Olivia Officer that "you have no reason to ask me any questions about the contents in my backpack." Furthermore, John maintained that "Mary is setting me up in order to get that presidential scholarship." Based on these comments, Olivia Officer believed that John was acting defensively. In addition, Olivia Officer noted that John did not look her in the eye when he talked to her.

After additional discussion, John consented to Olivia Officer's request to search his backpack. During the search, Olivia Officer located pills in a bottle. The pills subsequently tested positive for methamphetamine. Based on this information and Mary's reported observation, Olivia Officer arrested John for possessing methamphetamine. No one else saw John with the methamphetamine. John claimed that Mary placed the drugs into his backpack and the drugs did not belong to him. The State Prosecutor is now presenting the case against John in the Delaware Superior Court.

The following evidentiary issues arise at trial during the Prosecutor's direct case [Do not discuss any issues relating to Miranda rights]:

* * *

1(a) During direct examination, the Prosecutor asks Olivia Officer what Tom Teacher reported to Olivia Officer (including Mary's statement) before Olivia Officer went to the Honors History classroom to meet with Mary and John.

John's lawyer objects on hearsay grounds. How should the Court rule and why?

1(b) During direct examination, the Prosecutor also asks Olivia Officer what John said to her in the physics classroom.

John's lawyer objects on hearsay grounds. How should the Court rule and why?

1(c) During her direct examination, Olivia Officer starts to testify that John acted defensively and seemed guilty.

John's lawyer immediately objects and argues that Olivia Officer is barred from giving this opinion. John's lawyer does not argue that this testimony is irrelevant. How should the Court rule and why?

1(d) During her direct examination, Olivia Officer also starts to testify that John would not look her in the eye.

John's lawyer objects and argues that this testimony is irrelevant and prejudicial. How should the Court rule and why?

* * *

The Prosecutor calls Mary as its only eyewitness during the State's direct case. During her direct examination, Mary testifies that she saw John swallow pills during the Honors History class on February 22 and return the bottle of remaining pills to his backpack.

2(a) During cross-examination, John's lawyer asks Mary if it was important to her that she be elected President and receive a scholarship to college.

The Prosecutor objects, arguing that this information is irrelevant. How should the Court rule and why?

2(b) During cross-examination, John's lawyer asks Mary about a previous juvenile criminal conviction which had occurred when Mary was in 7th grade, and in which Mary pled guilty to knowingly using counterfeit tickets in order to attend a popular rock concert.

The Prosecutor objects, arguing that this information is inadmissible character evidence. How should the Court rule and why?

* * *

3(a) During direct examination, the Prosecutor asks Tom Teacher whether he had heard that John had been acting in an "erratic" manner and had been "on edge."

John's lawyer objects, claiming that this testimony is impermissible hearsay. How should the Court rule and why?

During direct examination, the Prosecutor asks a question to which Tom Teacher testifies in response that John was overly aggressive and would do just about anything to get ahead.

John's lawyer objects, claiming that this testimony is improper character evidence. John's lawyer does not object on the basis that it is an improper opinion. How should the Court rule and why?

---

QUESTION 8

In recent years, two national competitors in the brew pub industry, Brew Crew, Inc. and Suds-N-Stuff, Inc., have begun buying local brew pubs. Suds-N-Stuff is the smaller of the two companies. Steve Sullivan ("Sullivan") is the CEO of Suds-N-Stuff. Barbara Connor ("Connor") is the President of Brew Crew. Both Brew Crew and Suds-N-Stuff have been engaged in aggressive campaigns to acquire locally owned brew pubs around the country in order to expand their respective operations.

Larry Lager ("Lager") owns and operates three brew pubs in Delaware. Lager was approached by both Connor and Sullivan about selling his three pubs. After substantial negotiations with both potential acquirers, Lager signed an agreement to sell all three pubs to Suds-N-Stuff. The deal between Suds-N-Stuff and Lager was conditioned upon Suds-N-Stuff receiving financing sufficient to close the transaction.

Confident that the transaction would ultimately close, Sullivan began negotiations with Lager's landlords and with local vendors for remodeling the brew pubs and providing food service, brewing supplies, and related goods and services. Sullivan was more successful in negotiating with the vendors than Lager. Nevertheless, none of Sullivan's negotiations were finalized.

When Connor learned that Lager had agreed to sell to Suds-N-Stuff, she was furious and decided to take action. Connor knew that Suds-N-Stuff generally obtained its acquisition financing from the same bank with which Brew Crew did its banking. Brew Crew was one of the bank's larger customers. Connor called her contact at the bank and threatened to terminate Brew Crew's relationship with the bank if it provided financing to Suds-N-Stuff for this acquisition.

Connor then called Lager. She told Lager that it was her understanding that Suds-N-Stuff would not be able to finance its acquisition of his three pubs. She also reiterated Brew Crew's interest in pursuing an acquisition. Connor had similar conversations with Lager's landlords and some of his vendors.

Lager immediately called Sullivan and demanded that Suds-N-Stuff provide assurance from its bank that it would have the financing to close the transaction. When Suds-N-Stuff was unable to provide that assurance, Lager sent a letter to Suds-N-Stuff terminating their agreement.

Shortly after the Suds-N-Stuff acquisition was terminated, Brew Crew and Lager entered into a sale transaction nearly identical to the Suds-N-Stuff deal. Now it was Sullivan's turn to be furious. Sullivan wrote a letter to Lager threatening a lawsuit for breach of contract. In that letter, Sullivan also wrote:

Sullivan had never even been in one of Brew Crew's pubs and had no personal knowledge regarding Brew Crew's health code record or its employee relations. He had, however, sampled some of Brew Crew's beer at a trade convention.

Sullivan also sent a copy of his letter to Robby Reporter ("Reporter"), a friend of his at the Restaurant Times, a trade magazine. Reporter was working on a story on the heated competition in the brew pub business. Although he left messages for Connor seeking a comment, she did not return his calls before the story was ready to go to press. In the story, Reporter wrote about the viciousness of the battle for market dominance between Brew Crew and Suds-N-Stuff, including the details of both competitors' attempts to acquire Lager's pubs. In that section of the story, Reporter quoted verbatim most of Sullivan's letter to Lager, including the above-quoted paragraph. Elsewhere in the story, Reporter stated that, based upon interviews with certain disgruntled, former employees, Brew Crew was attempting to gain a competitive advantage by cutting employee benefits.